1. What should the new VEET target
be?
Other
Other (please specify a target and
length): [Required if 'Other' selected]
*
6.2 for 2016, 10.0 for 2017, higher targets post
2017
1a. Please outline why you prefer the
target you identified, or why you
selected "No response":
Energy Makeovers (EM) supports a target of 6.2
million tonnes for 2016, as a minimum “floor”
target for the VEET scheme going forward. EM
recommends that the 2017 target be set at 10
million tonnes, with subsequent targets being
open to upward adjustments as needed to assist
Victoria to meet its future carbon abatement
targets. "Energy efficiency will be a critical
element of Victoria's climate change response"
(stated position of Lisa Neville, Minister for
Environment, Climate Change and Water). EM
anticipates that it is entirely plausible that it will
be necessary for the VEET scheme to contribute
greater levels of energy efficiency-based
abatement in coming years. The Federal
Government has indicated it will announce
Australia’s targets by mid-2015, well ahead of
the international negotiations for a new climate
agreement in Paris in December 2015. The
Climate Change Authority (CCA) "recommends
a 2025 target for Australia of 30 per cent below
2000 levels. The CCA considers this target is
comparable to the efforts of other countries. In
recommending targets, the CCA attaches most
weight to the science of climate change, the
efforts of comparable countries to reduce their
emissions, and Australia's own long term
interests. In considering targets for the post-2020
period, the CCA has taken account of the
uncertainty regarding Australia's action to 2020,
and how quickly Australia might ‘catch up’ with
global efforts. The recommended 2025 target of
a 30 per cent reduction by 2025 remains
reasonable and achievable even if Australia does
not strengthen its 2020 target beyond the
minimum 5 per cent reduction. If Australia is
able to do more than 5 per cent by 2020, this
would allow a more gradual acceleration of
effort beyond 2020. The draft report builds on
the CCA's 2014 report, Reducing Australia’s
Greenhouse Gas Emissions - Targets and
Progress Review, released in February 2014. The
Authority considers the recommendations in that
report remain appropriate. These include a 2020
target of 19 per cent below 2000 levels, a 2030
range of 40 to 60 per cent below 2000 levels, and
a long-term emissions budget to 2050. These
goals would help Australia make a fair
contribution to global climate action to limit
global warming to less than 2 degrees."
2. Comments are invited on the
modelling approach used to determine
the costs and benefits of the VEET
scheme. Is there any additional data or
information that should be
considered?
It is not clear to EM, from the information
provided that the avoided cost of climate change
adaptation has been included in the modelling.
We understand that carbon valuations from the
CCA have been used, however, the methodology
is not sufficiently transparent to determine
whether avoided adaptation costs have been
considered in arriving at forecast carbon values.
EM would appreciate positive assurance from
the Department that the avoided cost of
adaptation has been included in the modelling,
and if so, under what range of mitigation
scenarios. EM also believes that engagement
with the insurance industry would be instructive
in developing a fuller quantitative understanding
of the benefits of taking early strong action to
avoid the higher future adaptation costs that
would accrue to the community's account.
Additionally, in this regard, we refer to the report
by the Australian Department of Climate Change
and Energy Efficiency (DCCEE), "Economic
Framework for Analysis of Climate Change
Adaptation Options", which reviews three
important case studies, namely: • coastal
inundation at Narrabeen Lagoon (‘the coastal
settlement case study’); • securing long-term
water supply for Central Highlands Water (‘the
water case study’); and • temperature impacts on
Melbourne’s metropolitan rail network (‘the rail
case study’).
3. Which greenhouse gas coefficient
should be used to quantify the
reduction in greenhouse gas emissions
achieved by the VEET scheme?
Updated marginal coefficient
3a. Please outline why you believe this
option is preferred, or why you
selected "No response":
It is important for the credibility of the VEET
scheme, as a carbon abatement scheme, that the
quantum of carbon abatement claimed as a result
of the scheme's operation be as accurate as
possible. Use of an updated marginal greenhouse
gas coefficient will provide the most accurate
measurement of actual abatement to be counted
towards Victoria's proposed abatement target (cf
other available alternatives).
4. The Department has valued
greenhouse gas emissions reductions
attributed to the VEET scheme by
adopting a carbon valuation series that
was produced by the Federal Climate
Change Authority as part of its 2014
Targets and Progress Review.Please
outline whether you think this
approach is appropriate for valuing
greenhouse gas emissions reductions
over the period 2016 to 2050?
Yes, EM supports use of the Federal Climate
Change Authority's 2014 Targets and Progress
Review as the best option for valuing greenhouse
gas emissions reductions, subject to EM's
comments (refer point 2. above) seeking
confirmation from the Department that the
benefits of avoiding future adaptation costs are
reflected in the value of avoided greenhouse gas
emissions (used in the VEET modelling).
5. Is there a case to exclude any
business sector(s) from participation in
the VEET scheme?
No
5a. Please outline why this is your
preferred option, and comment on
how this should be implemented:
5b. Please outline why this is your
preferred option:
Business sectors should not be excluded from the
VEET scheme, however, business sectors should
be set separate targets from the residential sector.
This would be analogous to STCs and LGCs in
the RET scheme. Continuity and certainty in the
VEET scheme is the key to encouraging
investment, employment and technology
development in industries that supply goods and
services which reduce the use of electricity and
gas by consumers. Currently the VEET scheme
is largely a residential scheme supporting around
1,000 direct and indirect jobs in Victoria.
Current residential activities are dominated by
Activity 21C (LED halogen down light
replacement). It is plausible that the introduction
of business, and in particular large
business/industrial, could lead to destabilisation
of the residential VEEC market via the
introduction of a large volume of VEECs created
at significantly lower cost (cf. 21C creation
cost). To eliminate the risk of
destabilising/disrupting the existing (successfully
functioning) residential VEEC market, EM
recommends that a separate category of
“business VEECs” be established. That is, two
(2) VEET categories to exist side-by-side,
business and residential. EM recommends that
the 2016 target of 6.2 million tonnes be restricted
to residential, and that a separate VEET target be
established for business. It may be appropriate to
separate the business VEECs into “SME” and
“large business” categories. It is likely that the
different VEEC categories would operate with
different supply and demand characterises and
market prices. This structure would also
facilitate the development and effective delivery
of separate policy objectives/targets for the
residential and business sectors. EM also
recommends that the VEET scheme and the
NSW ESS scheme be harmonised (building on
the work done by both governments to date), to
ensure that the “best practices” relating to
business sector processes in the NSE ESS can be
incorporated into the VEET scheme as quickly
and cost effectively as possible.
6. Should the VEET scheme be
amended to better ensure support for
low income households?
Yes
6a. Please outline how the VEET
scheme could better support low
income households, and comment on
why this option should be preferred:
It is worth noting that the VEET scheme is (and
has been) naturally skewed towards the lower
socio-economic demographic by virtue of the
activities in the scheme that require no financial
contribution from the consumer.
Notwithstanding the foregoing, the VEET
scheme may be amended to better support low
income households. This could be achieved by
setting a separate target for a dedicated category
of “low income VEECs”. This “low income
target”, perhaps based on concession card holder
status, should be in additional to the VEEC
volumes currently modelled.
6b. Please outline why this is your
preferred option:
7. In addition to expanding the range
of energy efficiency activities available
in VEET, should any other action be
taken to target participation by certain
groups?
Yes
7a. Please outline the actions you
believe should be taken:
Yes, retailers of efficient appliances should be
targeted as a specific group. EM recommends
that improvements be made to ensure that more
VEECs are generated at the point of sale of new
efficient appliances; currently Activities 22, 24,
25 and 26. Since the VEET scheme commenced
only 16,000 VEECs have been created in these
categories largely due to the administrative
burden involved in requiring that individual
consumers assign their VEECs to APs. Effective
1st January 2016, EM recommends that the sale
of new appliance methodology used in the NSW
ESS be adopted by Victoria as part of a broader
harmonisation effort. EM has conclusive
evidence (from NSW) to demonstrate that
adoption of the NSW ESS methodology for sale
of new appliances would result in the creation of
an additional 500,000 VEECs in 2016 (and with
a lower creation cost than 21C resulting in
downward pressure on the VEEC price in 2016
and beyond.) [EM can provide supporting data
on request.]
7b. Please outline why no other action
should be taken, or why you selected
"No response":
8. Please suggest up to five activities
that should be prioritised for revision
or introduction to the VEET scheme.
Please outline why you believe these
activities should be prioritised.
2016 revisions: 1. Adopt sale of new appliances
methodology as currently operating successfully
in NSW ESS (with VEEC's owned by appliance
retailers and not consumers) 2. Restore the
abatement factor for insulation (residential and
business) 2016 new: 3. Project-based activities
for residential [upon request EM can provide
details of a proposed project targeting over
500,000 customers in 2016] 4. Project-based
activities for business (recommend establish as a
separate category to residential) 5. VEECs be
awarded for new houses with Nationwide House
Energy Rating Scheme (NatHERS) ratings
greater than the mandatory 6 stars. Note:
NatHERS is the main methodology used for
compliance purposes in the NCC/BCA
administered by the Australian Building Codes
Board (ABCB). 2017 and beyond: 6. Future
proposals: a) VEECs for electric vehicles (petrol
resellers as liable entities) and b) Peak demand
VEECs (networks as liable entities)
9. Please suggest up to three changes
which should be made to improve the
VEET scheme. Please outline why you
believe these changes should be a
Effective 1st January 2016: 1. Harmonise the
VEET scheme with the NSW ESS: a) Sale of
new appliances - a significant early “win” would
be the adoption of the current NSW ESS sale of
priority.
new appliances methodology for VEET,
whereby the appliance retailer owns the VEECs
for assignment purposes to the AP. This would
create around 500,000 new VEECs in 2016 with
a lower creation cost than 21C thereby putting
downward pressure on the VEEC price. b)
Project based activities - introduce project based
activities into VEET (both residential and
business, with business being established as a
separate category to residential to ensure
residential scheme stability). VEET would
benefit from the early adoption of the proven
project based methodologies used successfully in
the NSW ESS. c) VEET Carbon Abatement
Curve to 2025 – it would be useful from an
industry planning perspective for the Department
to publish 6 monthly updates of the VEET
Abatement Curve to 2025. This curve would
update and reflect the latest emerging
technologies and their costs. 2017 and beyond: 2.
Commence planning work to incorporate electric
vehicles into the VEET scheme (with petrol
retailers as the liable entities) 3. Prior to the
introduction of Residential Mandatory
Disclosure, VEECs should be awarded where
consumers voluntarily pay for “whole-of-house”
ratings, using an energy/carbon measurement
tool that takes into account the thermal shell and
fixed appliance profile of the building.